Holmes v. Lerner states that two partners can form a partnership orally even without a profits-sharing agreement if their conduct demonstrates what?

• A. An explicit profits-sharing agreement is required in all cases
• B. Profit sharing is presumed equal in the absence of a written agreement
• C. Profits go to the partner who contributed more capital
• D. The partnership is invalid without a written agreement

Answer: (B)

The key idea is that a partnership can be formed by the way the parties conduct themselves, even without a written profits-sharing agreement. In Holmes v. Lerner, the court recognizes that two people can enter into a partnership orally if their actions show they intend to share profits. When profits are dispersed equally in practice, that conduct creates a presumption of equal profit sharing, which signals an implied partnership exists despite the lack of a formal written agreement.

So, the best answer aligns with the notion that, in the absence of an explicit written profits-sharing agreement, profits are presumed to be shared equally, and the parties’ actual conduct demonstrating equal sharing is what establishes the partnership.

Why the others don’t fit: requiring an explicit profits-sharing agreement would ignore the possibility of forming partnerships by conduct; the idea that profits always go to the partner who contributed more capital contradicts the general default of equal sharing absent an agreement; and saying the partnership is invalid without a written agreement misunderstands that oral partnerships can exist, with writing sometimes merely clarifying terms rather than being a prerequisite to formation.